Iron ore futures prices rose on Monday to their highest in a week, driven by increasing bets that top consumer China will announce more stimulus measures during its third plenum this week, following a series of disappointing economic data.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended the morning trade 1.76% higher at 840 yuan ($115.68) per metric ton, marking the highest price since July 8. Similarly, the benchmark August iron ore on the Singapore Exchange was up 1.3% at $109.2 per ton as of 0419 GMT, having reached an intraday high of $110.15 per ton earlier in the session, also the highest since July 8.
Data released on Monday showed China’s economy slowed in the second quarter due to a prolonged property downturn and job insecurity, which dampened domestic demand. This kept expectations alive that Beijing would need to introduce more stimulus. The world’s second-largest economy grew by 4.7% in April-June, according to official data, marking its slowest growth since the first quarter of 2023 and falling short of the 5.1% analysts’ forecast in a Reuters poll. This was also a decline from the 5.3% growth recorded in the previous quarter.
Additionally, Chinese bank lending in June increased less than expected, while some key money gauges hit fresh record lows, according to data released last Friday. A highly anticipated third plenum, which began on Monday, is expected to outline efforts to promote advanced manufacturing, manage the ongoing property crisis, and boost domestic consumption, as indicated by policy advisers.
Analysts noted that the near-term resilient demand for steelmaking ingredients is also supporting prices. China produced an average of about 3.05 million tons of crude steel daily in June, the highest since April 2023, according to Reuters calculations based on data from the National Bureau of Statistics.
Other steelmaking ingredients on the DCE also saw gains, with coking coal and coke rising by 1.2% and 2.3%, respectively. Steel benchmarks on the Shanghai Futures Exchange followed this upward trend. Rebar increased by 1.3%, hot-rolled coil gained 1.1%, stainless steel edged up nearly 0.4%, while wire rod remained little changed.
The rise in iron ore futures prices reflects market optimism regarding upcoming Chinese stimulus measures, driven by recent economic data and ongoing policy expectations.
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